Stocks Turn Higher as Europe Jitters Ease

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Stocks posted triple-digit gains Friday as worries in Europe eased and traders grew hopeful the Federal Reserve could delay ending its stimulus program.

Today’s Markets

The Dow Jones Industrial Average rallied 263 points, or 1.6% to 16,380, breaking a six-day losing streak. The S&P 500 tacked on 24 points, or 1.3%, to 1,890, while the Nasdaq soared 41.1 points, or 1%, to 4,258. All ten S&P 500 sectors were in the green.

Continuing the recent trend in equity markets, Thursday was another volatile day for Wall Street. Stocks fell sharply in early trading, but remarks by St. Louis Federal Reserve Bank President James Bullard helped the market pare most of its losses. In fact, the S&P 500 eked out a gain for the day.

Traders are closely watching the Fed, which is on pace to fully phase out its bond-buying program at the end of October. Bullard, who has a reputation as a fiscal hawk, said the central bank should consider delaying the end of QE3, even though U.S. fundamentals remain strong.

Mounting concerns over economic growth in Europe have also driven recent volatility in the market.

On Thursday, yields on Greece’s 10-year bond surged above 7%, which was seen as a critical threshold during the Eurozone’s sovereign debt crisis. Greece, Portugal, Italy and Spain saw yields retreat Friday amid easing jitters.

Shares in Europe were broadly higher, with the U.K.’s FTSE 100 up about 1.9%. Germany’s DAX closed 3.1% higher.

In the U.S., housing starts jumped 6.3% in September compared to the prior month, reflecting a seasonally adjusted annual rate of 1.02 million units. That topped a consensus estimate from economists surveyed by Thomson Reuters. Building permits, a gauge of future construction, advanced 1.5% to a pace of 1.02 million units. The data help give investors confidence the housing market recovery will continue.

Consumer confidence jumped to its highest level since July 2007, according to the latest survey from Thomson Reuters and the University of Michigan. A preliminary reading for October checked in at 86.4. Economists were looking for the index to fall from a reading of 84.6 in September.

On the corporate front, strong earnings helped fuel Wall Street’s sentiment.

General Electric (NYSE:GE) shares rose 2.4% after the conglomerate beat Wall Street’s views for third-quarter earnings. Honeywell (NYSE:HON), whose stock rallied 4.3%, also beat earnings expectations and raised the lower end of its outlook for the year.

Morgan Stanley’s (NYSE:MS) third-quarter earnings soared 83% on stronger results in trading and investment banking. The news sent shares 2.1% higher.

In commodities, West Texas Intermediate crude oil settled five cents higher at $82.75 a barrel. Wholesale New York Harbor gasoline rose two cents to $2.23 a gallon.